Confessions of a Debt Survivor: How I paid off $81,000 of debt

It took Melanie Lockert, 31, more than a decade to pay down $81,000 worth of debt. She made headlines in major news outlets across the U.S. when she wrote about her debt survival story on her blog, Dear Debt.

Eight in 10 Americans are in debt, according to a 2015 report published by the Pew Charitable Trusts.

Credit card debt and student loan debt increased by $32 billion and $31 billion, respectively, according to a report by the Federal Reserve Bank of New York.

“The United States is a consumer-driven society, so the way our financial system is set up, it’s conducive to consumers taking on a lot of debt, and it often makes sense to do so to be financially successful,” says Joseph Goetz, an assistant professor of financial planning at the University of Georgia.

It took Melanie Lockert, 31, more than a decade to pay down $81,000 worth of debt. She made headlines in major news outlets across the U.S. when she wrote about her debt survival story on her blog, Dear Debt.

“I was in debt pretty much my whole [adult] life,” says Lockert, who began her debt spiral by borrowing student loans for college at age 17.

Debt survivors, such as Lockert, have overcome key struggles, such as making difficult lifestyle choices, tackling depression, and earning more money. We asked Lockert to share some of the tough lessons she learned during the years she spent chipping away at her debt.

“It was hard to watch everyone live their lives while I put my life on hold.”

While living in Portland, Ore., and focusing on paying off her debt, Lockert skimped on everything while she worked a job as a temp that paid her about $20,000 a year.

One of the most difficult things was watching all of her friends make large purchases and get married while, in her late 20s and early 30s, she had a roommate and often lived paycheck to paycheck. She felt as if she had regressed to her lifestyle as an undergraduate student.

“And so to put all these dreams on hold and pretty much living at the standard that I was when I was 18 or 20 years old while all of my friends are upgrading their apartments, it was difficult,” says Lockert. “You have to really divorce yourself from what you think you should have or what’s expected from you at a certain age.”

“I had to move to a different city.”

Cost of living is a huge factor in a person’s ability to pay down debts. Lockert knew that paying for her New York City apartment wasn’t helping her toward her debt goal. So she packed up and moved to Portland, Ore., where her rent payment was half what she paid in New York City.

“I even gave up health insurance.”

Looking for anywhere she could scrounge up extra money to put toward her debt, Lockert says she cut back on everything. She chose to walk to work instead of buying a car, skipping cable TV, and putting off her dream of adopting a cat for a few years.

Her most drastic decision was to give up health insurance.

“I checked out health insurance options and it would cost a couple of hundred (dollars) per month,” she says. “I decided to go without health insurance to put that money toward my debt.”

“I sacrificed my friendships and relationships.”

Lockert says that at times she was overwhelmed by debt and felt as if it would bury her alive.

“All the side-hustling and debt repayment definitely took a toll on my health and my relationship,” says Lockert, a freelance writer now living in Los Angeles. “I was making more mistakes and being really clumsy and just constantly stressed out and tired, which obviously takes a toll on any relationship. I wasn’t really fostering my friendships either because I was busy all the time. Definitely there was an emotional toll. “

Stress and debt often go hand in hand, says Goetz, a past president and founding board member of the Financial Therapy Association, which studies the mental causes and effects of financial stress.

People in troublesome debt are twice as likely to develop symptoms of depression, according to a 2016 report by the Money and Mental Health Policy Institute, a London-based nonprofit.

“Some people with depression or anxiety or spending disorders struggle for some psychological reasons in managing their finances,” Goetz says. “So they may want to seek out someone who has expertise in financial therapy.”

“Sometimes I made debt payments every week.”

One day, Lockert calculated how much interest on her student loans was costing her daily. When that number came out to $11 per day, she says she was initially shocked and then mad, but seeing the number made her angry enough to focus and take action.

Lockert made biweekly and even weekly payments, instead of the traditional once-a-month schedule, to pay off her student loans. She used the avalanche method, which whittles away the high-interest debt first.

“I didn’t let it sit in my account, it was definitely going straight to the debt,” she says.

When making a payment plan, it is important to focus on the higher interest rates first, says Goetz. Paying off the higher interest rates, while still paying the minimum on the lower interest rates, will prevent debtors from paying out even more over a longer period of time.

“This is the big mistake most people make,” he says. “They try to send an equal amount to all of their debts to pay down all of their debts. It accelerates the paydown of all their debts equally, or proportionally, when that’s the wrong move.”

“I became way too comfortable making minimum payments after college.”

Lockert says she wishes she had been more aggressive at paying down her undergraduate loans while in graduate school.

“I know for the first five years after my undergrad, I was just paying the minimum because that’s what I thought you were supposed to do,” she says. “You pay the minimum and you’re set. It never even occurred to me to put more toward debt.”

When Lockert took on more loans in order to get her master’s, she says she knew she didn’t want the rest of her life to be focused on her debt.

“I was working this whole time and I still didn’t put extra money toward debt, and I really regret that,” she says. “So I started putting a lot of money toward my debt.”

“I had to find a second job.”

Despite her drastic budgeting strategy, Lockert knew she wasn’t going to get far on her wages as a temp alone.

“It’s kind of sucky because when you’re paying off debt you want all these solutions, but I realized that there was nowhere else I could cut back from,” she says.

At a certain point she realized the only solution was to earn more. She immediately began taking side jobs to bring in extra cash. She worked as a brand ambassador, event planner, pet sitter, and even assisted a mom in changing diapers, running errands, and making dinner. Most important, she began her blog, Dear Debt, and began a successful freelance writing career. Eventually, she earned $60,000 per year just from writing gigs.

Two years after graduating from New York University, she got a job that paid her $31,000 a year with benefits.

She made her final loan payment on Dec. 10, 2015.

“I was shocked that I was done with debt,” she says. “I saw the number $0.00. I was kind of freaking out, to be honest, and then after 10 minutes of being a hot mess, I started screaming and jumping up and down, ‘I’m free, I’m free, I’m free.’”

MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.